ISS bondholders settle dispute

The long-awaited €785m bond backing the LBO of ISS by EQT and Goldman Sachs has been delayed until 2006, according to one of the two lead managers.

Bondholders said in July that they would sue ISS over potential losses if senior debt to fund the takeover subordinated existing bonds. However, a bondholder group led by European Credit Management (ECM), recently told the Danish cleaning company that it would drop legal plans after it received more information about the security packages for new bank and bond debt.

ISS made an announcement to the Luxembourg stock exchange two weeks ago after discussions with creditors. Changes to the documents were made to satisfy the concerns of the holders of the 2010 and 2014 notes.

“We are pleased to confirm that, as a result of such discussions and subsequent changes to the documents, that group of six note-holders has now informed us that they are satisfied that the specific nature of the proposed financing will not result in any infringement of the terms of the notes, nor will the proposed financing be otherwise unlawful,” said a company spokesperson in a statement.

The main concerns of bondholders seemed to be the possibility that the new bond would be given guarantees that would then rank it ahead of existing MTNs. The company later changed its mind and assured existing creditors that they were no longer pursuing the guarantee, said a banker close to the situation. Bondholders also felt that the proposed financing contravened the negative pledge on its existing MTNs that said no publicly tradable securities could be ranked ahead of them. The company’s counsel said that this did not include loans and the new bank debt could be placed ahead of the MTNs.